Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economic Research Unit (ERU-Kolkata)


Gupta, Manash Ranjan (ERU-Kolkata; ISI)

Abstract (Summary of the Work)

Growth theory is one of the most important branches of macroeconomics. Growth theory helps us to understand the intertemporal behaviour of a dynamic economy and to understand the properties of the long-run rate of economic growth. It identifies the factors causing the deviation of the actual rate of growth from the socially efficient rate of growth and analyses the effectiveness of various policies in removing this gap. It analyses the condition of stability of the long-run equilibrium and also attempts to establish links between the long run equilibrium and the persistence of underdevelopment.With the emergence of the ‘new’ growth theory, human capital accumulation and its role on economic growth has been placed at the forefront of the research in macroeconomics. The resources embedded in individuals, which make them more productive and equip them to earn higher real income in future, are called human capital. These are individuals’ health, acquired skills and learning abilities. While the physical capital goods are owned by the capitalists and the ownership of physical capital is readily transferable by sale, the human capital is inherently embodied in workers and is subject to physiological constraints at the individual level. The social productivity of human capital can be expanded if its accumulation is widely spread among individuals in the society, whereas the aggregate productivity of the stock of physical capital is largely independent of the distribution of its ownership. So human capital needs separate attention while studying its contribution to eco1 nomic growth.A lot of works have been done on the theories of human capital accumulation and endogenous economic growth in recent years; and an extensive theoretical literature focusing on the role of human capital accumulation on economic growth has been developed. Our purpose in this chapter is to present a survey of the existing literature.1.1 Old Growth Theory:Exogenous Growth The old growth theory starts with the works of Solow (1956) and Swan (1956) who first formalize growth models of an one sector competitive economy. This model is known as the neoclassical one sector growth model. In this model, the steady state growth equilibrium of the economy is defined as a state where its aggregate capital labour ratio is time independent. The steady state growth equilibrium is shown to be stable; and the rate of growth of output in the steady state growth equilibrium is equal to the sum of the rate of labour augmenting technological progress and rate of growth of labour force. Both the rate of technological progress and the rate of growth of labour force are assumed to be exogenous and these make the long run equilibrium rate of growth to be exogenous. Fiscal and monetary policies of the government can not affect this long run rate of growth. However, the short run rate of growth varies inversely with the capital intensity of the economy in the transitional phase of development.


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Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.


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